Czech Republic PMI May 2022

Czech Republic

Czech Republic: Manufacturing PMI drops to lowest value in one year and a half in May

June 3, 2022

The S&P Global Manufacturing Purchasing Managers' Index (PMI) dropped from April's 54.4 to 52.3 in May, the lowest value since October 2020. However, the index remained above the critical 50-point threshold that separates an expansion from a contraction in manufacturing sector activity compared to the prior month.

May’s reading chiefly reflected another fall in new orders, a marginal expansion in output, and the weakest increase in employment since October 2021. Meanwhile, backlogs of work increased amid severe supply disruptions and supplier delays. On the price front, input cost increases at one of the fastest paces on record amid soaring costs for fuels, transportation and steel, while output prices rose at the third-highest pace on record. Lastly, output expectations remained upbeat, although confidence was weighed down by concerns about the Russia-Ukraine war.

Commenting on the release, Siân Jones, senior economist at S&P Global, stated:

"Amid some signs that inflation may be peaking, it is hoped that recent hikes in interest rates by the Czech National Bank will help inflationary pressures abate. That said, Czech manufacturers face substantial headwinds through the rest of 2022 which are likely to dent growth momentum further. Prices continue to rise markedly, dampening client demand and reducing scope for investment, while uncertainty regarding the Russia-Ukraine war remains heightened.”

FocusEconomics panelists see fixed investment expanding 6.3% in 2022, which is unchanged from last month’s projection, and growing 5.2% in 2023.

Author: Massimo Bassetti, Senior Economist

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